Florida Fifty Percent Rule


What is the 50% rule, and why is it important? The 50% Rule is a regulation of the National Flood Insurance Program (NFIP) that prohibits improvements to a structure exceeding 50% of its market value (excluding land) unless the entire structure is brought into full compliance with current flood regulations. This may include elevating the structure, using flood-resistant materials, and proper flood venting, among others.

What is Substantial Improvement and Substantial Damage?  At its most basic, under the 50% FEMA Rule, if an improvement is “substantially damaged” or “substantially improved,” it must be brought into compliance with the flood damage prevention regulations, including elevating the building to or above the 100-year flood elevation. Each community is responsible for determining the definitions of “substantial damage” and “substantial improvement,” but most communities use the same basic definition.

“Substantial Damage” is “damage of any origin sustained by a structure whereby the cost of restoring the structure to its before damage condition would equal or exceed 50 percent of the market value or replacement cost of the structure before the damage occurred” and

“Substantial Improvement” is “any reconstruction, rehabilitation, addition, or other improvement of a structure, the cost of which equals or exceeds 50 percent of the market value of the structure before the start of construction of the improvement.”

Why is it important to know if an improvement is substantial? Exceeding the Substantial Improvement threshold requires the entire structure to be brought into compliance with current NFIP regulations, the Florida Building Code, and the local Land Development Code. This may include elevating the structure at or above the base flood elevation, floodproofing it, installing proper flood venting, and using flood-resistant construction materials.

In calculating the FEMA 50% Rule only looks at the market value of the structure/improvement on the property, and not the land value. The FEMA 50% Rule value. Most local jurisdictions do allow the property owner to obtain their own appraisal to determine the value of the structure/improvement.

At The Sage Group, we can assist you in an appraisal relating to the 50% rule that could save you thousands of dollars and may assist you in the ability to improve your existing structure if it lies in the flood plain.

We specialize in cost estimate appraisals at The Sage Group and use a variety of sources to develop replacement costs and depreciated values of commercial and residential structures.  We utilize real time cost information to develop the replacement cost appraisals for the 50% rule.

With more than 35 years of experience, TSG incorporates cost methodologies ensuring that we have the tools for a complete and defensible determination of value, with multiple methodologies, including the square foot, segregated, and unit-in-place methods, and regularly updated cost data, TSG eliminates the guesswork of the cost approach.